In public comments on the North American Free Trade Agreement (NAFTA) negotiations that are taking place, federal Finance Minister Bill Morneau said Thursday that his government department is running several internal scenarios that include what would happen if NAFTA talks fail and the trade agreement ends.
“My job is to think about how we can ensure the economy is successful in the long term, so we do look at the economic impacts of any NAFTA discussion in order both (to determine) how do we improve and also to think about the challenges that the long discussion might present,” Minister Morneau said following a meeting in Toronto with his counterpart from Mexico, José Antonio González Anaya.
Morneau said model scenarios are “a confidential part” of Ottawa’s NAFTA analysis and declined to discuss the potential impact on the economy or any specific sector if the trade agreement were to fall apart. He stressed that the focus remains on strengthening the deal. The talks, which resume again next week in Montreal, have been contentious due to some extreme rhetoric from U.S. President Donald Trump.
“The job of the Department of Finance is to run models on everything … so we have an understanding of sector-by-sector impact on how we can make a positive impact on our economy and jobs, and that will continue to be our approach to this analysis,” said Minister Morneau at a news conference Thursday. “Be prepared, be ready to have constructive discussions, and understand the impacts, potentially both positive and challenging.”
He added that Ottawa remains “very focussed on Plan A, on making sure that NAFTA continues to provide great jobs that it’s done for the last generation or two.”
On Wednesday, the Bank of Canada’s Senior Deputy Governor, Carolyn Wilkins, warned that Canada’s economic growth outlook “remains clouded by uncertainty related to the future of the North American Free Trade Agreement.” Her remarks came as the central bank raised the benchmark overnight interest rate by one-quarter of a percentage point to 1.25%.
Minister Morneau stressed several times on Thursday that Ottawa is committed to a three-country deal on NAFTA.
“We’re working very closely together,” he said, standing next to Mr. González, who was recently appointed Mexico’s Secretary of Finance and Public Credit.
“I think we share a view that NAFTA is better with three countries, and so we’re moving toward a solution that works for all three of us, and so that’s the goal,” said Canada’s Finance Minister.
Morneau and González spent the day in meetings that included discussions with representatives of businesses in the mining and financial sectors, including banks and pension funds.
A statement released Thursday by the Department of Finance said the commercial relationship between Canada and Mexico is “strong and growing.” It noted that Mexico is Canada’s third-largest business partner, with bilateral merchandise trade reaching a “milestone” of $40.8 billion in 2016. That same year, Canadian direct investment in Mexico reached about $17 billion, while Mexican direct investment in Canada totalled nearly $2 billion.